The Assistant Collector of Customs, Appraising Department vs H.V. Jain

Ramakrishnan, J.—This appeal is directed against the order of Veeraswami J., in Writ Petition No. 784 of 1959.

The Respondent had an import licence for importing an agricultural product from China called Star Aniseeds and he entered into a contract with

a firm in Hong Kong for the purpose. That firm despatched the commodity and invoiced it for a price of Bs. 979.16 nP., the equivalent of � 73-

1-3, being the value of 35 cwts. at Sh. 41-9d. per cwt. The importer has two obligations in such a context. One flows from his import licence,

column 6 of which, requires him to give the approximate C.I.F. value, to the customs authorities. This is intended to see that the importer does not

exceed the value for which the licence has been given to him. Any contravention of this requirement will constitute an offence under the Import

Control Order, 1955, read with Section 167(8) of the Sea Customs Act. There is a further obligation on the importer, which flows from ''the

provisions of the Sea Customs Act. u/s 29 of the Act he is obliged to declare in his Bill of Entry or shipping bill, as the case may be, the real value,

quantity and description of the goods imported, to the best of his knowledge and belief, and shall subscribe a declaration at the foot of the Bill of

Entry regarding the truth of his statement. Section 30 of the Act clarifies the meaning of the word real value thus:

...the real value shall be deemed to be:

(a) the wholesale cash price less trade discount, for which goods of the like kind and quality are sold, or are capable of being sold, at the time and

place of importation or exportation as the case may be, without any abatement or deduction whatever, except (in the case of goods imported) of

the amount of the duties payable on the importation thereof; or,

(b) where such price is not ascertainable, the cost at which goods of the like kind and quality could be delivered at such place without any

abatement or deduction except as aforesaid.

A contravention of this obligation is visited by the penalty in Section 167(37)(c) of the Sea Customs Act, which provides for a penalty, if it be

found, when the goods are entered at the customs either for importation or exportation, that the contents of ''the packages have been misstated in

regard to sort, quality, quantity or value.

The customs authorities apprehended that the Aniseeds imported by the Respondent from Hong Kong, were being valued at a figure much less

than their real value, and they gave notice to the importer to show cause against confiscation of the goods, as well as levy of penalty, stating that he

had contravened both Section 167(8) and Section 167(37) of the Sea Customs Act. After an enquiry, at which the importer was represented by

learned Counsel Sri R.M. Seshadri, the Assistant Collector of Customs, Madras, ordered confiscation of the goods under both the sections above

referred to, and gave him the opportunity to pay a fine of rupees two thousand eight hundred in lieu of confiscation and to clear the goods.

Thereafter, expressing the opinion that the importer had deliberately under-valued the goods leading to loss of revenue, a personal penalty of Rs.

250 was also imposed on him, u/s 167(37) of the Sea Customs Act. Aggrieved against this order, the importer filed the writ petition now under

consideration, which came up before Veeraswami J., for disposal. The learned Judge referred to the plea of the importer that, that in this particular

case the goods being from old stock, the Hong Kong dealer was prepared to sell them at a lesser value, and the department had completely

overlooked this aspect of the question. There was nothing to show in this case, that the invoice price was merely a cloak for dishonest means of

importing goods of higher value than that covered by the licence. There were no circumstances justifying such a finding. There was nothing in the

Sea Customs Act, which prohibited, an importer from getting a favourable bargain by which he was enabled to import goods of higher value for a

lower price, and he could not be penalised if the price shown in the invoice had been honestly arrived at as a result of a good bargain. The learned

Judge also referred to a prior judgment given by one of us reported in Narayanan v. Collector of Customs 1962 M.W.N. 685 in support,

observing that the facts in this case were more or less analogous to those dealt with in that decision. He thereupon allowed the writ petition and

quashed the order of the Customs authority. Against this decision, the Customs authority has filed the appeal under the Letters Patent.

It is pointed out to us on behalf of the Appellant, that the obligation to conform to the terms of the licence granted to the importer under the

Import Control Order, 1955, will be fulfilled if the importer gives the C.I.F. value for the purpose of satisfying the authorities that he had limited the

value of the goods imported to the maximum permitted under his licence. If he was able to get a favourable bargain from his seller, he can stick to

the lesser value thus obtained, and give it as the C.I.F. value. He is not obliged in such a case to give the real value as defined in Section 30 of the

Sea Customs Act. It is this view which was mentioned by one of us, in the decision in Narayanan v. Collector of Customs 1962 M.W.N. 685,

where at page 686 the following observation is found:

The question in the present case is whether for the purpose of construing the licence granted to the Petitioner that value u/s 30 has got to be

adopted.... The only governing factor, so far as that question is concerned, is the contract price between the parties.... There may be cases where

the invoice price was only a camouflage to hide the real price. In those cases it will be competent for the authorities to ascertain the real price of the

goods for the purpose of entry without offending the provisions of the Import Control Order. In the present case there is no suggestion that the

C.I.F. price covered by the invoice sent to the Petitioner is anything other than � 36-15-0.

It is obvious that the above decision was confined to the first of the obligations we have mentioned above, namely, conforming to the terms of

the licence granted under the Import Control Order, and for that purpose, the importer will be considered to have fulfilled his obligation if he gives

the C.I.F. value but if there are data to hold that the C.I.F. value itself is a camouflage to hide the real value that passed between the importer and

his seller, the customs authorities are entitled to see that the importer does not take an undue advantage of his licence and use it as a cloak for

importing goods for which the real bargain constituted a higher value than the permitted maximum value of the import licence. But the offence u/s

167(37) read with Section 29 of the Sea Customs Act is not an offence against the conditions of the import licence but is an offence against the

revenue. The crux of it lies in trying to import into the country, goods whose real value is higher than the value declared in the Bill of Entry, and

thereby evading payment of the proper customs duty. This second obligation has not been the subject-matter of the decision above referred to,

and arises with reference to this particular case before us. No doubt, the Customs authority proceeded to deal with the importer on the basis that

he had violated both the obligations. In view of the fact that there is no evidence that the bargain, which he struck with the Hong Kong seller and as

revealed in the-invoice, was anything other than the real bargain between them, it could be properly held that there was no case for punishing the

importer u/s 167(8) for violating the terms of the licence granted to him under the Import Control Order. But the second obligation leading to a

penalty u/s 167(37) of the Sea Customs Act still remains to be considered. The Assistant Collector of Customs in the order imposing the penalty,

has specifically referred to this aspect of the case. He has observed:

Inspection of the sample has shown that the goods are fresh and there is no difference between the average quality goods and those under dispute

now. This position has also been accepted by Shri Seshadri. The enquiries in the local market show that this commodity has never been offered at

a price lower than � 77 per ton. The enquiries also reveal that there is a very good demand for Star Aniseeds and the available stocks can find

ready buyers. In the case of manufactured articles, there may be occasions when accumulated stocks are offered at a lower price specially when

the types are getting obsolete and being superseded by-other improved patterns. In the case of Star Aniseeds which is an Agricultural produce

these considerations do not hold good. The inspection of the samples shows that the goods imported are fresh and as good as goods of normal

quality quoted at � 77 per ton. This being the case, I am not inclined to place reliance on the correspondence produced and accept the plea of

the importers that the goods have been obtained at the lower price these being from old stock lying with the foreign suppliers.

This would show that the Customs authority held, on the data gathered, that the declaration in the Bill of Entry about the real value of the goods

was an incorrect declaration, not made to the best of the knowledge and belief of the importer.

The best of the knowledge and belief, for the purpose of Section 29 relates not so much to the bona fides of the bargain secured with the seller,

but it relates to the real value to the goods in the Indian market, for which the import of goods is intended. The Respondent, by virtue of his having

been able to obtain an import licence, must have been fully aware of the conditions in which Aniseeds were being sold in the Indian market at the

time of the import. The Customs authority was certainly entitled to hold, in the above circumstances, that the value given in the Bill of Entry was

deliberate under-statement. The learned Counsel for the Respondent urged before us that the Customs authority had not adverted to the

requirement of best of knowledge and belief mentioned in Section 29 of the Act. But the Customs authority has given a finding that the under-

statement was deliberate, implying that the importer could not rely upon the plea of bent of knowledge and belief.

Veeraswaki J., has not adverted to the portion of the finding of the Customs authority, relating to the second obligation leading to the penalty u/s

167(37); but has proceeded on the basis that what mattered was only the giving of the invoice price for the purpose of conforming to the Import

Control Order. But the Respondent having attacked the order of the Customs authority which covers contravention of both the provisions, the

question whether there was a contravention of Section 167(37) was a matter affecting the jurisdiction of this Court, for interfering with the order of

the Customs authority in Writ proceedings. Consequently, it is open to us, to examine the correctness of the order of the Customs authority from

the point of view of the contravention of the second obligation. We find that there were adequate data before the Customs authority for its

conclusion. The conclusion is one on the facts, both regarding the real value, and regarding the deliberate misdeclaration, about it. The finding,

therefore, cannot be assailed in writ proceedings. No doubt, the order of confiscation is based upon an adverse finding against the importer

regarding the contravention of both the obligations, but the order can certainly be supported on the finding regarding the contravention of the

second obligation. To such a case the principle laid down by the Supreme Court in State of West Bengal Vs. B.K. Mondal and Sons, will apply. It

appears to us that the order of confiscation passed by the Customs authority as well as the penalty imposed, are not assailable in these

proceedings.

The appeal is allowed and the writ petition is dismissed. The Appellant will get the costs from the Respondent, in this appeal.